Indian Automobile Industry Faces The Problem Of Plenty

Will the falling automobile sales trigger an economic recession? First the US and now the European Union (EU) are facing the same problem. Automobile sales across the world are declining.

- Tushar K Mahanti

Nearly every major automaker in the US reported weak sales for the first quarter of 2019. Rising vehicle prices and the fear of continuing high interest rates are considered among the major reasons for this downturn. General Motors witnessed a 7% drop in first quarter sales in 2019 compared to the same period last year. According to industry data, Ford’s sales fell by 2% in the same quarter.

New vehicle sales in the US were at 1,590,217 units in May. This represented a decline of 0.2% from May 2018. Passenger car sales fell 10.4% to 474,138 units last May.

According to the European Automobile Manufacturers Association, the sales figure for March 2019 for the European passenger car market saw a 3.9% decline on a y-o-y basis. Sales in March was dismal with Italy posting the highest percentage drop (-9.6%), followed by Spain (-4.3%), the United Kingdom (-3.4%), France (-2.3%), and Germany (-0.5%).

Indian auto-makers are facing the problem of plenty. The stockyards of automobile manufacturers have piles of unsold cars. This has compelled the country’s top auto majors to cut production. Passenger vehicle sales in India posted the steepest drop in nearly 18 years in May amid weak demand and a liquidity crunch faced by non-bank vehicle financiers.